MORE and more property buyers are finding a way of cashing in on falling property prices, an expert has revealed.
Jonathan Rolande says soaring numbers are now purchasing properties in CASH because it can help secure a cheaper and quicker deal.
Mr Rolande, from the National Association of Property Buyers, said: “We are seeing a lot more cash purchases across the market, and I expect this to carry on over coming weeks and months and to happen a lot more.
“Cash buyers appear to buy more keenly-priced property. Those that might have been cash plus mortgages are now buying lower priced homes for cash only, to save paying big fees and high interest rates.
“More sellers will choose cash over mortgaged or chain buyers so there are more cash sales even when the price may have been higher from a different buyer.”
Mr Rolande said that, generally, choosing a cash buyer is the best bet but there are potential pitfalls
He said: “Cash buyers are more likely to buy with head than heart so may be less committed.
Make sure the money isn’t locked into an account that needs notice to withdraw or you could be left waiting. Some estate agents try to block cash buyers as there is no additional commission for referring a mortgage – this is not lawful but be wary of it – you may lose a good buyer.”
Statistics indicate Mr Rolande’s prediction of continued growth in this area is right.
According to the latest data, the proportion of cash buyers is growing. In the first three months of the year, 37,972 properties 31 per cent of all property sales in England and Wales in the period were paid for without a mortgage.That’s up from the 29 percent of properties that were paid for in cash in the same period in 2021 (79,551) and 27 per cent in 2020 (49,415), according to Land Registry data.
In some parts of the country, particularly in London, cash buyers make up two thirds of the market. Some 66 percent of buyers in prime central locations such as Mayfair, Knightsbridge and Kensington paid in cash between January and July, up from 58 per cent a year ago.
Cash buyers are usually homeowners looking to downsize where their equity will be more than the value of the property they are buying property investors, or wealthy buyers who don’t need a mortgage.
Homeowners have been encouraged to downsize to free up cash and cut costs amid rising energy bills, mortgage rates and living expenses. About 24 percent of buyers last year were downsizers, said the estate agency Hamptons, and 41 per cent of buyers this year so far.
For investors, paying in cash can mean a quick purchase and then a quick return from renting out or flipping the property. According to the Office for National Statistics, rents increased by 5.1 per cent in the 12 months to June 2023.
Rising interest rates have put many people’s plans to buy a new house on hold. The average two-year fixed rate is 6.84 per cent, compared with 2.49 per cent in 2021, while the average five-year fixed rate is 6.35 percent compared with 2.93 per cent in 2018. Many have decided to stay put, in the hope that rates will come down.
